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ISLAMABAD: Federal Minister for Finance, Revenue and Economic Affairs Asad Umar chairs a meeting of the Economic Coordination Committee of the Cabinet on Monday.—INP

ISLAMABAD: Amid Pakistan Muslim League-Nawaz’s criticism and Sindh’s opposition, the government on Monday stepped back from a gas price increase until a fresh cross-subsidy mechanism is in place and allowed subsidised import of 100,000 tonnes of urea to ensure price stability in the coming Rabi season.

The two politically sensitive economic issues were discussed in detail at a meeting of the Economic Coordination Committee (ECC) of the Cabinet presided over by Finance Minister Asad Umar.

Before the meeting, Sindh Chief Minister Syed Murad Ali Shah called Mr Umar to convey reservations of his government over the gas price increase, informed sources told Dawn. Mr Shah is reported to have told the federal minister that a decision on gas price adjustment was outside the ECC’s jurisdiction and should be considered, if need be, at the level of Council of Common Interests (CCI) as required under the Constitution.

He said it would be unfair that the price of natural gas to be paid by the provinces was set by the Centre or any of its forums having no provincial representation. He also reported that Sindh’s position on the subject was already on the record of the CCI since the tenure of the previous government. The provincial government would be left with no option but to approach the court with a constitutional petition.

Allows subsidised import of 100,000 tonnes of urea to ensure price stability in Rabi season

The issue came up for discussion at the ECC meeting where the representatives of the petroleum division could not justify why the question of CCI and provincial objections that were part of the record in the previous government were absent from the summary seeking gas price increase.

The meeting also discussed the rationale behind 186 per cent increase proposed for the poorest domestic slab of 100 and 300 cubic metres per month and 30pc for all other consumer categories when such a pattern was never part of the gas pricing in the past. There were some suspicions over the proposal and the meeting felt the need for adjustments in proposed rates.

This also coincided with strong criticism from the opposition PML-N whose president Shahbaz Sharif claimed credit for a gas price freeze over the past four years and accused the new government of double standards.

Therefore, the government decided as part of its new strategy to build public opinion against the N-League’s narrative and weakness of its economic policies but without holding formal news conference to avoid difficult questions from media men. Instead, in a recorded message, Information Minister Fawad Chaudhry said the ECC deferred once again a decision on gas price increase to work out a mechanism for rearrangement of subsidy with approval of the prime minister.

He said the ECC reviewed prevailing economic situation, including the proposed increase in gas and electricity rates necessitated after the departure of PML-N government. The detailed position would be presented before parliament by the finance minister, he said.

Mr Chaudhry said the ECC kept pending the decision on proposed gas price increase for the time being and instead decided to work out and debate a subsidy mechanism in a manner that the poorest of the poor were not overburdened but rich people contributed to the deficit. He said the revised subsidy mechanism would be presented to the prime minister for a final decision on gas price increase.

He claimed that gas companies had no deficit when the PML-N took over in 2013 but in five years the “experienced team” left behind annual deficit of Rs156 billion for the two gas companies. He said the previous government should explain the situation, but claimed that theft of everything increased over the past five years and the gas sector was no exception.

The minister said the ECC decided to import 100,000 tonnes of fertiliser for the Rabi season and provide Rs960 per bag subsidy to the farmers. He said the prevailing market price of urea was around Rs1,615 per 50-kg bag but imported commodity would cost Rs2,575 per bag. The government would provide Rs960 per bag subsidy, he said.

Informed sources said the import of 100,000 tonnes of urea would cost about Rs2bn subsidy even though the commodity would be imported most probably from Saudi Arabia under deferred payment credit. Another Rs3bn subsidy would accrue on account of domestic production by Pak-Arab and Agritech.

Mr Chaudhry said arrangements have also been made to provide gas to domestic fertiliser plants to ensure that fertiliser requirements of the farmer community are fulfilled. He said farmers were the crucial part of Prime Minister Imran Khan’s economic policy and the government would not take any decision adversely affecting them. Therefore, despite tough financial position the government would not put an additional burden of imported product on farmers.

The information minister said the ECC also asked all the provincial governments to launch a crackdown against a mammoth increase in the price of liquefied petroleum gas (LPG) to end sufferings of the poor people. He said the piped gas was available to only a 40pc population while remaining 60pc still relied on LPG and firewood. He said the LPG price had increased by 70pc over the last few weeks and the government would make sure a mechanism for the LPG price stability.

Comments (53) Closed

By the time IImran Khan and cCompany's tenure end they may end up creating a world record for Backtracking their decisions.

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Hanif

Sep 11, 2018 07:54am

Its the season of U-turns! Why not think any proposal through before declaring it to media?

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Socrates

Sep 11, 2018 07:54am

Yet another Uturn, though a welcome one for poor consumers like me.

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Anti-Corruption_Pakistani

Sep 11, 2018 07:58am

My advice to PTI is: think very carefully, conduct detail assessments, determine benefits and adverse consequences before making or taking any political, financial or social decisions. Avoid 'U' turns'!

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Javed

Sep 11, 2018 08:11am

Will it be a step back at the first sign of protest, I am afraid a bad precedent is being set here, and an easy way is being shown to PML-N and TLP.

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Harun

Sep 11, 2018 08:14am

One more U turn, because of thoughtless and immature decision!

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Qaiser Ahmed

Sep 11, 2018 08:23am

Don't simply claim and move on that theft took place; resulting in an annual deficit of Rs 156 billion. This is a very large amount. Hence, you have the means to investigate this robbery and bring to justice the guilty parties., and make them pay Rs960 per bag that we have to pay now. And if you are not strong enough to do it then where is the difference between PTI and PMLN.

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Salman Ali

Sep 11, 2018 08:29am

The OGRA website shows that LNG purchase cost is at 13-14% slope vs 3 month Brent prices. PTI government should try to renegotiate lower slope of 10-11% as Brent prices have gone up. Same as they plan to review CPEC agreements.

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Saad

Sep 11, 2018 08:46am

Ppp comes to rescue us.

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hassan

Sep 11, 2018 08:58am

The Govt. is unable to make decisions on solid ground. The U turn upon U turn on almost every policy/decision is very dangerous for the country in the long run. This sort of decisions is making the PTI Govt. unreliable in the eyes of common public and provide an opportunity to the opposition to make mockery of the Govt.

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FAROOQ

Sep 11, 2018 09:01am

Those of us who resign from the EAC must find alternative ways to help. All three who have resigned, including Atif Mian, have indeed affirmed their commitment to remain engaged."
Remarkable decision by the three great national economists and slapped to the evil forces always using Islam for their nefarious design . .I salute to all three heroes in this regard.

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Magnanimous approach

Sep 11, 2018 09:05am

Defer means left for future. The circular debt, the great trade deficit, all left by ran away former Finance Minister Ishaq Dar. PM Imran Khan must restrict import of Cars, Mobile Phones, and other nonessential items, that can correct the trade imbalance.The two forgotten Gas Projects must be revived, TAPI and Iran Gas,
for TAPI Gas is subject to peace in Afghanistan, while from Iran there is no hurdle, except US sanctions, since India is seeking waiver for its continued supply of Iranian Oil, Pak too may ask similiar waiver for Oil & Gas. But will US agree that’s a million dollar question. There are other Oil customers too like China & Japan, both willing to buy Oil & Gas from Iran. USA too is one of the largest exporter of LNG like Qatar & Iran.Obviously if Iran LNG is forbidden, the US LNG sales will further grow,
Russia & China both seems adamant to lessen US influence in Asia, and working hand in gloves, US is doing all to antidote the Sino Russian doses, and influences.

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muftikhalid

Sep 11, 2018 09:07am

It is strange to learn that government was void of CCI subjects before undertaking critical issues like electricity and gas tariffs. It seems that government is working under haste. PTI government must get thorough briefing from law ministry on 18th amendment and its effects on NFC and CCI before further deliberations on adjustment of tariffs.

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Najum

Sep 11, 2018 09:08am

They wanted the residents of Sindh to pay the 46% when Punjab and KPK had only a single digit increase. Sham is beginning to take shape.

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nazir

Sep 11, 2018 09:11am

This is the beginning of 'Naya Pakistan'!

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Arif

Sep 11, 2018 09:13am

Mr Asad Umer, you are not in a cooperate sector now. Keep all provinces on board before taking any decision.

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Jalaluddin S. Hussain

Sep 11, 2018 09:16am

It is a leg-pulling exercise and nothing else!

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Feroz

Sep 11, 2018 09:18am

This is a flip-flop government beholden to many masters, which will fritter away its goodwill rapidly.

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GHALIBJEEE

Sep 11, 2018 09:24am

Though I didn't agree with such a high percentage of Gas hike, with winter around the corner, but if this Govt. keeps on backtracking then it would not be taken seriously,

They need to think properly before making these kind of decisions

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GHALIBJEEE

Sep 11, 2018 09:25am

This Govt. is making decisions like Trump does out of whim. they need to put on their thinking cap

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Amjad Durrani Engineer USA

Sep 11, 2018 09:44am

Here we go. This continued somersault in policy decision making is becoming a joke. This clearly shows that coming up with a vital decision to correct one of the many wrongs causing current account deficit, was based on a sloppy & incoherent summary without mention of important past decisions in the matter. This summary prepared by bureaucrates, remanant of NL govt. sitting in petroleum ministry seems to have purposely not included part of record related CCI question and previous Sind govt’s objections w/r to removal of subsidy from gas prices. This is a very serious omission & clearly shows that either the govt. institutions by & large are not in new govt.’s control or those in charge of making fiscal policy don’t do their homework properly before taking such important decisions. If either is true, then we are definitely heading towards very turbulent waters. Unless PTI does not make its house in order, there is all likelihood that all its future decision may end up in similar fiasco

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Mehboob Ali Lalani

Sep 11, 2018 09:50am

Increasing prices of gas would spiral high the prices of electricity as well. This will increase the cost of production.

The government must cut the size of the government. Do something about Steel Mill, PIA etc to reduce the burden on nation and slashdown all unnecessary imports.

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IQBAL HADI ZAIDI

Sep 11, 2018 09:54am

PTI minister issued instructions and then took the back is terribly terrible and nakedly exposes PTI to incompetence and inefficiency which is very much damaging to be honest if PM Imran Khan Niazi in particular and rest PTI in general realizes. It is very much prudent to think once, twice and thrice reading all the pros and cons and gauging its utility and then only decide to introduce and implement or not to introduce but if once something is introduced then PTI must stick to it and should not take it back simply because someone opposed. Here Sindh opposed ad Finance Minister had to cancel and withdraw mend Sindh CM belonging to PPP has prevailed over PTI Finance Minister. I suggest that Minister must ask those persons who recommended or supported minister’s such move. Done is done and cannot be undone but let it not happen again otherwise PTI will be ridiculed by men and women alike right from east to west and south to north and I very much doubt PTI can swallow such bitter pill. Iqbal Hadi Zaidi

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Fareed

Sep 11, 2018 10:03am

Inexperienced, it's good PPP keep on check on them.

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Ravi

Sep 11, 2018 10:08am

Austerity measure seen in the photo. All the persons are having a one liter water bottle in front of them. Which is a waste. 200 ml would have been sufficient for the needy.

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Danish

Sep 11, 2018 10:34am

If any government in Pakistan give subsidiaries how the earth they will progress. Nation don't want to pay taxes only people who taxes is Gov. Or sami gov employees.Business cummnity hardly pay taxes and expect benefits from Gov.

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Guddis

Sep 11, 2018 10:36am

Working on an ad hoc basis.

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Amjad Durrani Engineer USA

Sep 11, 2018 10:49am

@GHALIBJEEE Very well said. The main issue here is that such decision of vital importance affecting masses are being taken in haste and without doing our homework, which is very alarming. To be honest with you such policy decisions to buoy our sinking economy, being many and are very unpopular to the masses, will be enforced by the IMF as essential conditionality before they approve excessive bailout loan of $9B. If our policy makers kept on practicing moving one step forward and two backward on such issues, they will never be able to get their bailout package approved by the lender. With US, being highest contributor of IMF funding, not in favor of such bailout on suspicion that that this money may be used for CPEC debt servicing is another hurdle. This implies that we must Do our homework diligently and with utmost care to avoid future pitfalls.

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f/o zak

Sep 11, 2018 11:33am

This goverment is providing too much to laugh at.

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Tomar

Sep 11, 2018 12:08pm

It is deferred as by-elections are coming.

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khanm

Sep 11, 2018 12:22pm

interesting comments...Take ambiguity away from leadership, and you take away tough decisions and responsibility. What you're left with is overpaid administration...remember...It is in your moments of decision that your destiny is shaped...what do I deduce after many U-turns...If I should ever be captured, I want no negotiation - and if I should request a negotiation from captivity they should consider that a sign of duress...Good luck..

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Alam

Sep 11, 2018 12:29pm

PPP has done something good in the favor of common people of Pakistan.

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asif

Sep 11, 2018 12:47pm

Thank you Sindh Government

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Sandy

Sep 11, 2018 12:51pm

IK and company is realising how easy it is to criticise others when its someone elses responsibility to meet targets.

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asif

Sep 11, 2018 12:54pm

Thanks to people of Sindh not to elect PTI otherwise, there won't be any one to stop the so called "tabdeeli" changing middle class to lower-middle and lower-middle class to poor.

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Dr. Sajjad

Sep 11, 2018 12:57pm

The govt is taking so many U turns that the turns are going to be circles for it.
Imran Khan will be revolving in circle after sometimes...

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El Cid

Sep 11, 2018 01:00pm

This is a tough call. Perhaps a graduated increase may be more pragmatic.

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El Cid

Sep 11, 2018 01:03pm

@Hanif It is not a U-turn. Iteration is an optimization process well understood in econometrics.

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asif

Sep 11, 2018 01:08pm

The government should plug the leak (theft) instead of increasing the prices.

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wellwisher

Sep 11, 2018 01:13pm

such U turns remind me of Kejriwal

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Dr. Salaria, Aamir Ahmad

Sep 11, 2018 01:49pm

At least they have the courtesy, audacity and courage to listen to dissent and act accordingly. In fact, this never happened in the past under any of the previous administrations in the Islamic Republic of Pakistan.

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FIDA SAYANI

Sep 11, 2018 01:52pm

A party which does not have inbuilt portfolio before taking the reign of the government is not fit to govern. Regarding the U-turns, they have become so frequent that one can say without doubt about the immaturity of the leaders of the ruling party.

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BAXAR

Sep 11, 2018 01:56pm

@f/o zak "This goverment is providing too much to laugh at." And they will continue doing so, until they do what their actual job is: collecting tax from the rich. Your laughter does not hurt them a bit, the rich's anger does a huge deal.

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rs

Sep 11, 2018 02:17pm

This government will go down as "U turn" government. At the slight protest, the decision is shelved.

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M. Emad

Sep 11, 2018 02:32pm

In South Asia, Pakistan's gas/ CNG price already the highest.

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AAhmed

Sep 11, 2018 03:46pm

@Khurram These U-Turns are a good sign of responsive democratic governance, government is heeding to the public demands rather than a "one man" dictate. Pakistanis are unfamiliar with democratic sensitivity of an elected government, because in the past elected PM were imposing their decisions on public with blatant disregard of outcry. Corrupt cronies were appointed on sensitive posts while public continued to protest. The government taking back its decisions on public demand is a good sign of democratic sensitivity. This happens in US and UK in much matured way, the nominees themselves step down when there is public opinion against them or a public hearing follows a nomination before final appointment. In the absence of such mechanism a good thing is happening is not being appreciated by media. Instead of criticism they should try to propose mechanisms to institutionalize this democratic sensitivity.

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QADIR KHAN BALOUCH

Sep 11, 2018 03:48pm

Gas, electricity petrol price hikes should not be revenue generating products for the government. It easy to put all the pressure on public instead of thinking hard to generate funds otherwise.

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Abe

Sep 11, 2018 04:07pm

@NK - may be you are right...At keast I prefer it over dictatorship and having no hope that bad decisions will be revered

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hani

Sep 11, 2018 04:28pm

This is why price controls never work. Look at all these highly paid bureaucrats wasting time trying to decide what price to sell gas at when the free market can do this work automatically. No 186% price shocks. Instead steady increases and decreases as per demand and supply.